GMAC Set to Use $6 Billion Bailout For Wider Range Of Customers

December 30, 2008

US (ChattahBox) – It looks like the automakers will be getting their bailout after all. GMAC LLC, the loan branch of General Motors, has been offered a $6 billion bailout plan by the US Treasury, in the first auto bail out to be offered by the government.  The company plans to put the influx of capital to work right away.

The money would be used to encourage further lending to loan-seekers looking to buy a new car, rather then in an attempt to stop an actual fall. It is hoped that the expensive measure will encourage spending, and so boost an economy that is leaning more and more heavily on the willingness of consumers to take financial risks.

The plan is for the Treasury to buy a large number of shares in GMAC’s holdings, equaling $5 billion, and the offer a loan of $1 billion dollars, which will all be used as money for lending, increasing the chances of giving a adrenaline shock to a failing auto industry. The money will come from the initial bailout fund that was approved in October of this year, and is likely to be the first of a string of loans that will be given out to other car companies.

After a 41% drop in sales, GM has promised “to act quickly to resume automotive lending to a broader spectrum of customers”.

They have also agreed to an oversight that will restrict dividend payments and executive payouts, in a measure that should have been taken with the disgusting amount of money given to banks over the last several months.

GMAC said Tuesday it will immediately resume auto financing for a wider range of U.S. customers. The company had been tightening down on auto lending amid growing losses and its inability to tap into funding. It issued 22% fewer auto loans around the globe in the third quarter compared with a year earlier.

GMAC said it will modify its credit criteria to include financing for customers with a credit score of 621 or higher, compared with the 700 minimum score it put in place two months ago. The median U.S. consumer credit score is 723. The financier said It won’t finance higher-risk transactions, defined by a credit score of 620 or below.


Comments

One Response to “GMAC Set to Use $6 Billion Bailout For Wider Range Of Customers”

  1. 晨风 on December 31st, 2008 12:51 am

    求生啊,美国的汽车工业

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